Government Of Grenada Repurchases Grenlec Shares In US $63 Million Settlement Agreement And Receives Additional 11.6% Shares

PR – The Government of Grenada has secured significant  cost savings in the just concluded repurchase of shares in the Grenada Electricity  Services Limited (GRENLEC), as part of its settlement agreement with WRB Enterprises which brings to an end, the International Centre for the Settlement of Investment Disputes  (ICSID) arbitration case brought by the company. 

Through the US $63 million settlement, which is US $12 million less than the arbitration  award, Government has now regained control of the 50% shares sold to WRB in 1994. In  addition, Government has also acquired the 11.6% shares which WRB purchased  through an affiliate company and which was used to plough profits back into the hands of  the company and its affiliates, rather than into critical ongoing capital investment to  maintain and improve GRENLEC’s generating capacity. 

Government was forced into the buy-back position when WRB initiated legal proceedings  in 2017 following the passage of laws by the Parliament of Grenada to liberalise the  electricity sector under a World Bank-funded OECS project. That project sought to  diversify Grenada’s energy sector to include renewables, THUS enabling the country to  meet its international commitments to reduce harmful greenhouse gases and to reduce  the cost of electricity to support private sector development. 

The legal action by WRB was grouded in a clause in the 1994 Share Purchase  Agreement signed by the then National Democratic Congress (NDC) administration which  provided the company with a monopoly on the generation and distribution of electricity, a  monopoly which also imposed restrictions on individuals and corporations seeking to  generate electricity for their own use. 

The New National Party (NNP) administration found this to be untenable, hence the  decades-long battle to correct what it perceived to be a grave injustice for both individual  consumers and the business community. 

According to the tribunal’s ruling in 2019, based on the 1994 Share Purchase Agreement,  Government was expected to buy back the WRB shares at the price laid out in the formula  in the Agreement which had no bearing on their fair value, and which worked out to be  about US$64 million, after WRB paid only EC$15 million for them. Inclusive of interest to  date, the award would be about US $75 million, a sum Government has been successful  in negotiating downwards.

Government and WRB subsequently entered into negotiations under a Framework  Agreement which imposed confidentiality on the proceedings, barring both parties from  issuing any public statement regarding the Award, the dispute that led to same, the  Framework, or any negotiations between them pursuant thereto. 

A deadline of December 29, 2020 was set as the closing date for concluding the  settlement agreement and it was only on Monday, December 28, that WRB lawyers  released to the Government the important signed documents providing warranties and  releases protecting the government from all liabilities that may be associated with  ownership of the shares. 

In keeping with the spirit of the Framework agreement, Government sought to issue a  joint statement with WRB but the company proceeded to issue its own press release on  the matter. 

Having now acquired majority ownership of GRENLEC and with the need for serious  investment looming to maintain the company’s electricity generation and distribution  capacity, Government has already approached the World Bank and the International  Renewable Energy Agency (IRENA) to procure the services of a world-class  management company to operate the utility, facilitate the divestment of the shares  through public offering, and to advance the country’s objectives towards greater use of  renewable energy and achieving energy security, returned reliability, lower prices, and  greater access, including the provision of much-needed renewable energy powered  streetlights across the country.  

With the arbitration settled, Grenada can now move forward with the much-needed reform  of the electricity sector, which is a key element of its transformation agenda as outlined  in the National Sustainable Development Plan 2020 – 2035.